The Sidewinder scandal

The Sidewinder scandal by Kevin Michael Grace Report 6Nov00 On October 20 the Security Intelligence Review Committee (SIRC), the government agency that oversees the Canadian Security Intelligence Service, issued its annual report. It devotes six pages to a joint RCMP-CSIS operation, Sidewinder, whose secret interim report, "Chinese Intelligence Services and Triads Financial Links in Canada," was issued in 1997. This report was suppressed, and all copies were ordered destroyed, as were all background materials. According to Sidewinder, Mr. Li is a director of the Beijing-controlled China International Trust Investment Company (CITIC), which had 1997 assets of US$23 billion. CITIC owns or controls Cathay Pacific Airlines, Hong Kong Telecom, Star TV, Poly Technologies and Norinco, suspected of arms shipments to Mohawk reserves. Mr. Li's company Hutchison owns 49% of Husky Energy. CITIC has invested $500 million to buy Canadian companies Celgar Pulp Mill and Nova Corp Petrochemical. Mr. Li and his son own "at least one-sixth to one-third of downtown Vancouver" and have extensive real estate holdings in Toronto. CITIC has "developed...close business links with Power Corporation." (Andre Desmarais, Prime Minister Chretien's son-in-law, is president and co-chief executive officer of Power Corporation.) Mr. Li is the largest (10%) single shareholder of CIBC, and a shareholder and director of the Hong Kong and Shanghai Bank, which in the 1980s acquired the Hong Kong and Shanghai Bank of Canada, Continental Bank and Lloyds Bank Canada. CIBC, in turn, bought the securities firms Wood Gundy and Merrill Lynch. Li Ka-Shing's son Richard bought 50.1% of Gordon Capital in 1985. (Jean Chretien was a senior adviser there from 1986 to 1990.) None of the above proves that Canada has been subverted by the People's Republic of China, but the linkages and connections revealed between Mr. Li and Mr. Chretien and his family (which are not detailed in Sidewinder but were reported elsewhere) are, as SIRC might say, disconcerting. But then, SIRC itself is not entirely in the clear. One SIRC member, James Andrews Grant, has a serious unreported conflict of interest. His biography on the SIRC Web site identifies him as a director of CIBC and chairman of the executive committee of the law firm Stikeman, Elliott, which has a long-standing relationship with CIBC's largest shareholder, Li Ka-Shing.
Report 6Nov00 (12) The Sidewinder scandal by Kevin Michael Grace RCMP Commissioner Giuliano Zaccardelli gave an extraordinary press conference on September 7. He told startled reporters, "There are criminal organizations that target the destabilization of our parliamentary system." The commissioner refused to give details but insisted he was not "fear-mongering." He concluded, "We don't want to wait until we become, unfortunately, like some countries around the world, where criminal organizations actually run part of the country." On October 20 the Security Intelligence Review Committee (SIRC), the government agency that oversees the Canadian Security Intelligence Service, issued its annual report. It devotes six pages to a joint RCMP-CSIS operation, Sidewinder, whose secret interim report, "Chinese Intelligence Services and Triads Financial Links in Canada," was issued in 1997. This report was suppressed, and all copies were ordered destroyed, as were all background materials. Project Sidewinder was abandoned but then restarted in 1998. A secret final report, "Echo," was issued in 1999. Sources close to Sidewinder have alleged that its 1997 report was first killed and then gutted because it revealed Chinese infiltration as a grave threat to Canadian security and sovereignty. The SIRC report rejects these allegations. It finds "no evidence of political interference" and claims Sidewinder "was not terminated; it was delayed when its initial product proved to be inadequate." The 1997 report is judged "deeply flawed...a loose, disordered compendium of 'facts' connected by insinuations and unfounded assertions. Overall, the document is rich with the language of scare-mongering and conspiracy theory." SIRC concludes that the destruction of "'transitory' documents related to Sidewinder's first draft" was "standard practice." The disappearance of other "non-transitory" documents is described as "disconcerting" but of no "material impact." The timing of the SIRC report two days before an election call and its pre-release leak to the National Post are suspicious. SIRC said in September that the report would not be released until the end of the year. Even more suspect is the September 25 assertion in the House of Commons by MP Lynn Myers, parliamentary secretary to Solicitor-General Lawrence MacAulay: "I would like to emphasize that I was not reading from or directly quoting the SIRC report, which is a classified report." He was referring to his September 20 statement to Canadian Alliance MP Jim Abbott dismissing the 1997 Sidewinder report as "deeply flawed" and a "conspiracy theory"--phrases identical to those used in the then-supposedly unwritten, unread, classified SIRC report. Unfortunately for the Liberals, however, all copies of Sidewinder were not destroyed. The Canadian Alliance and various media, including this magazine, now possess them. The report, 30 pages long and badly translated from the original French, makes a shocking allegation--Hong Kong tycoons, triads (gangs) and Chinese intelligence services "have been working for 15 years in concert with the Chinese government, and some of their 'financial ventures' in Canada serve to conceal criminal or intelligence activities." These activities include money laundering, heroin trafficking and the transfer of economic, high technology and intelligence data to Beijing. Sidewinder alleges the corruption of the Canadian business and political establishments: "The triads, the tycoons and [Chinese intelligence] have learned that [the] quick way to gain influence is to provide finance to the main political parties...China has obtained access to influential figures who are now or once were active at various levels of Canadian society." Foremost among the Chinese tycoons, according to Sidewinder, is Li Ka-Shing, of whom U.S. Congressman Dana Rohrabacher has testified, "The U.S. Bureau of Export Affairs, the U.S. Embassy in Beijing and the Rand Corporation...have identified Li Ka-Shing and [his company] Hutchison Whampoa as financing or serving as a conduit for Communist China's military for them to acquire sensitive technologies and other equipment." Last year Forbes estimated Mr. Li's family as the eighth richest in the world, with assets totalling US$10.6 billion. According to Sidewinder, Mr. Li is a director of the Beijing-controlled China International Trust Investment Company (CITIC), which had 1997 assets of US$23 billion. CITIC owns or controls Cathay Pacific Airlines, Hong Kong Telecom, Star TV, Poly Technologies and Norinco, suspected of arms shipments to Mohawk reserves. Mr. Li's company Hutchison owns 49% of Husky Energy. CITIC has invested $500 million to buy Canadian companies Celgar Pulp Mill and Nova Corp Petrochemical. Mr. Li and his son own "at least one-sixth to one-third of downtown Vancouver" and have extensive real estate holdings in Toronto. CITIC has "developed...close business links with Power Corporation." (Andre Desmarais, Prime Minister Chretien's son-in-law, is president and co-chief executive officer of Power Corporation.) Mr. Li is the largest (10%) single shareholder of CIBC, and a shareholder and director of the Hong Kong and Shanghai Bank, which in the 1980s acquired the Hong Kong and Shanghai Bank of Canada, Continental Bank and Lloyds Bank Canada. CIBC, in turn, bought the securities firms Wood Gundy and Merrill Lynch. Li Ka-Shing's son Richard bought 50.1% of Gordon Capital in 1985. (Jean Chretien was a senior adviser there from 1986 to 1990.) None of the above proves that Canada has been subverted by the People's Republic of China, but the linkages and connections revealed between Mr. Li and Mr. Chretien and his family (which are not detailed in Sidewinder but were reported elsewhere) are, as SIRC might say, disconcerting. But then, SIRC itself is not entirely in the clear. One SIRC member, James Andrews Grant, has a serious unreported conflict of interest. His biography on the SIRC Web site identifies him as a director of CIBC and chairman of the executive committee of the law firm Stikeman, Elliott, which has a long-standing relationship with CIBC's largest shareholder, Li Ka-Shing. Canadian Alliance MP Jim Abbott, who raised the Sidewinder issue in the Commons, reports that he was immediately denounced by a Liberal MP as a "racist." He adds, "Unfortunately, many Canadians are prepared to buy into these labels, and for that reason they find so much of this  [Sidewinder] unbelievable." Mr. Abbott takes pains to stress that while he understands "there is a very malicious, a very serious criminal side to triad organizations, there's also the other side within the Chinese culture, where they are part of exchanging power and influence. This is something that we, from our Caucasian, Judeo-Christian basis, just don't comprehend." Elections Canada loopholes make it easy for gangsters and foreign agents to contribute to Canadian politicians, money which is sometimes received unwittingly. While Mr. Abbott admits his party has "not taken any formal steps" to prevent such occurrences, he explains, "We're very deeply concerned about it and are doing our level best with what information we have to make sure we aren't compromised."